Assume the government reduces your welfare check by $1 for every $2 that you earn on the job while on welfare. How will this tax affect your labor supply decisions? What is the implicit tax rate of such a policy?
What will be an ideal response?
The higher tax lowers the effective wage. The lower wage reduces the opportunity cost of leisure and discourages work. The implicit tax rate is 50%.
Economics
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Figure 10.4 Federal Surplus or Deficit as a Percent of GDP
What will be an ideal response?
Economics
A job loser is an individual
A) in the labor force whose employment was involuntarily terminated. B) who used to work full time but left the labor force and has now reentered it looking for a job. C) in the labor force who quits voluntarily. D) who has never held a full-time job lasting two weeks or longer but is now seeking employment.
Economics